One year after signing the tripartite term sheet for the financing and technical services arrangement between NNPC/FIRST E&P JV and Schlumberger for the Anyalu and Madu fields under Oil Mining Licence, OML 83 and OML 85, offshore Nigeria, a final nod was given to the package over the weekend in London with the execution of the final contractual agreement.

Under the agreement, global oil services giant, Schlumberger would provide $724.14m out of the required project cost of $1.082bn while the balance of $358.79m is to be funded with cash flows generated by the project.

The Anyala and Madu fields are projected to have 193 million barrels of crude oil and 0.637 trillion cubic feet of proven gas reserves with production plateau of 50, 000 barrels of oil per day and 120 million standard cubic feet of gas per day.

Group Managing Director of the NNPC, Dr Maikanti Baru

Speaking at the signing ceremony which was also attended by chief executives of the other parties to the deal, Group Managing Director of NNPC, Dr. Maikanti Baru, said in arriving at the innovative alternative funding package, the corporation was guided by the need to instill transparent and accountable processes.

He further added that NNPC also followed strict compliance with all extant laws, regulations and established governance protocols as well as overriding national interest and drive to achieve competitive market pricing for such a greenfield project.

Dr. Baru explained that the NNPC/FIRST E&P JV project financing formula came as a creative approach to funding JV operations in response to the realities of the prevailing operating environment.

According to the GMD, “apart from aligning wholly with government’s aspiration of increased crude oil and gas production, reserves growth and monetization of the nation’s enormous gas resources, the model is in tandem with one of the corporation’s 12 Business Focus Areas (BUFAs); ramping up crude oil & gas reserves & production which also supports Government’s 7 Big Wins aspirations’’.

He said the Schlumberger financing package covers pre-Final Investment Decision (FID) funding, 100 per cent of capital expenditure for three years and pre-production operating expenses.

He added that the package would enable the country to generate $5.60bn in taxes and royalties and $1.32bn in net cash flows after Schlumberger’s cost recovery & compensation in line with the terms of the agreement.

The OMLs 83 & 85 are in shallow waters 40km offshore in the Niger Delta. NNPC holds 60 per cent interest in the licences while, FIRST E&P, the operator of the JV, holds the remaining 40 per cent interest. Apart from providing funding for the development of the fields, Schlumberger would also provide other oilfield services to the JV on a limited exclusive basis. A joint project team would drive technology transfer whilst leveraging on the global technical expertise of Schlumberger and the extensive local knowledge of the JV partners.

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, has said that the speculations that oil has been found in commercial quantity in the Bida Basin should be discountenanced, stressing that the search for oil in the basin is still ongoing.

Dr. Baru made this submission while delivering his acceptance speech during his conferment with the fellowship award by the Ibrahim Badamasi Babangida (IBB) University, Lapai weekend.

Speaking on the topic: “The Role of Inland Basins in Unlocking the Socio-Economic Benefits of a New Nigeria”, he posited that NNPC was desirous of discovery of oil and gas in the frontier basins, stressing however that the corporation was currently at the fourth, out of ten intensive stages, of determining if hydrocarbon has been generated in the basin.

The NNPC helmsman averred that upon completion of determination of hydrocarbon generated, the corporation would initiate another six stages of integration of the studies to identify positive hydrocarbon anomalies, acquisition of 2D seismic data over anomalies, acquisition of 3D seismic data to validate identified structures, drilling of exploration wells, drilling of appraisal wells and evaluation of the engineering and economic parameters required.

He emphasized that NNPC recognised that the Bida basin exploration was in the fourth stage of these activities, adding that it is important to state that efforts have not advanced to the level of declaring discoveries, talk-less of claiming that the oil and gas present is in commercial quantities.

“It is also imperative to state that even after commercial discovery of hydrocarbons, it is pertinent that pronouncements be made only after due validation of claims by the Industry Regulator – the Department of Petroleum Resources (DPR),” Dr. Baru advised.

He expressed the hope that with the clarity provided, all claims and counter claims in respect of the Bida basin hydrocarbon discoveries would be given the befitting rest they deserve, advising that until the conclusion of the current NNPC-led efforts or any other ones in that respect, all claims should be discountenanced.

Dr. Baru maintained that the corporation’s foray into the inland basins was to expand its exploration footprint with a view to improving the nation’s oil and gas reserves, increase oil and gas production and spinoff socio-economic activities across the country.

According to him, NNPC through its relevant subsidiaries is currently engaged in aggressive exploration campaign at most inland basins with a view to discovering new oil and gas reserves that will boost oil and gas production and the extended economic benefits to the people within those basins and the nation at large.

Dr. Baru maintained that NNPC, as the concessionaire of all the blocks in these basins, is committed to working with all stakeholders around the Bida basin and beyond to advance the current efforts to fruition and thereafter follow all the laid down regulations for reporting such discoveries.

“It is our utmost desire that the success of the ongoing exploration campaign in the Inland Basins will usher in a new Nigeria. A new Nigeria with balanced resources distribution; diverse economic activities and sustained energy security as we move towards the industrialised economy we all desire,” the GMD said.

Dr. Baru applauded President Muhammadu Buhari for giving the corporation the mandate and all the necessary support and encouragement to lead a renewed search for oil in the inland basins, adding that the Niger State Government has been very helpful towards the cause of securing Nigeria’s energy future as exemplified by its support for the NNPC exploration activities in the Bida basin.

He also commended the Ibrahim Badamasi Babangida University with respect to the studies carried out on the characterisation of the Bida basin, stressing that the studies would help NNPC in the ongoing exploration activities in the basin.

According to him, the corporation would from time-to-time engage the University for further support in areas relating to the ongoing exploration in Bida basin. “Ours is a symbiotic collaborative relationship with this ivory tower,” he concluded.

The State Governor, Alhaji Abubakar Yahaya Bello, expressed gratitude to the NNPC for engaging the University on the basin exploration, saying that the GMD deserves the recognition bestowed on him by the university.

On his part, the Pro-Chancellor of the University, Dr. Mohammed Santuraki, gave kudos to Dr. Baru on the efficient way he runs NNPC thereby impacting the lives of Nigerians positively.

Earlier, the Vice Chancellor of the University, Prof. Muhammad Nasirudeen Maiturare, thanked Dr. Baru and the NNPC for partnering with the University in the Bida basin exploratory activities, assuring that the University would continue to contribute its quota to the oil search in the basin.

Prof. Maiturare averred that the GMD of NNPC was deserving of the fellowship award, given the corporation’s quest to grow the nation’s reserves base and spread the oil exploration map across the country.